2004-5-20
This is Bob Doughty with the VOA Special English Economics
Report.
Concern about inflation is in the news a lot lately. In the
United States, prices have risen especially for gasoline and other
forms of energy. Higher energy prices lead to higher prices for
other goods.
Oil prices are high. But experts say this is not the only reason
for the current fuel prices. They say companies in the United States
are making as much oil into gasoline as they can. But drivers need
lots of fuel for popular sport utility vehicles and personal trucks.
Government economists reported that inflation rose at a yearly
rate of four-point-four percent between December and April. For all
of last year, the United States had an inflation rate of
one-point-nine percent. These numbers are based on the Consumer
Price Index.
The Consumer Price Index is a way to measure average change in
prices over time. It shows how inflation affects the average person.
The Bureau of Labor Statistics gives a report each month.
Some economists say the economy may be growing too fast and
causing prices to rise. They expect the Central Bank to raise
interest rates. Such action raises the cost to borrow money. Less
borrowing and spending can help keep down prices.
The Federal Open Market Committee met this month and decided not
to raise interest rates. But the committee meets again in June. One
measure it will look at is the Consumer Price Index.
Here is how an index works. Let us say that some object cost an
average of ten cents in nineteen-ninety. An economist then gives
that price an index value of one-hundred.
In the next year, the price goes up to eleven cents. That is a
ten-percent increase. So the index value for the year is
one-hundred-and-ten. Changes are recorded this way year after year.
The Department of Labor gathers prices that Americans pay for
medicines, housing, clothes and food. It gathers prices for
education, transportation and other activities.
The Consumer Price Index is made up of thousands of measures. But
it does not measure prices in areas outside of cities and large
towns. Also, it does not measure how price changes affect individual
groups, like the poor or retired people.
The measure mostly widely reported is called the Consumer Price
Index for All Urban Consumers. It measures prices paid by about
eighty-seven percent of Americans.
This VOA Special English Economics Report was written by Mario
Ritter. This is Bob Doughty.